Today's complex business environment frequently gives rise to conflicts of interest between divisions of an organization. For instance, conflicts of interest may arise when an auditing division of an organization interacts closely with a consulting division of the organization. In a second instance, conflicts of interest may arise when an investment advising division of an organization interacts closely with an investment management division of the organization. In a third instance, conflicts of interest may arise when a first attorney at a law firm previously represented a first client whose interests are opposed to the interests of a second client who is now being represented by a second attorney at the same law firm.
Ethical guidelines frequently recommend the use of “ethical walls” between divisions of an organization to prevent conflicts of interest that may arise when such divisions interact closely. When an ethical wall is used, people in such divisions of the organization are forbidden to communicate on matters that could lead to a conflict of interest. For instance, in the third instance given above, an ethical wall would prevent the first attorney from communicating with the second attorney about the first client and would prevent the second attorney from communicating with the first attorney about the second client.